All posts by Gregg Brandyberry

Changing the close-minded nature of a stakeholder to the value of procurement is a big challenge. But procurement isn’t beaten yet.

Have you just started following this series of posts? Don’t miss the first two! I’ve been sharing my perspective on procurement productivity and efficiency from over four decades worth of experience in the field. Catch up here on Part 1 and Part 2.

If you’ve ever met me, you’ll know it is in my nature to look forward. I’m always trying to figure out what is likely to come next for a profession that has already seen so much change.

Although most of the time we consider savings as the primary procurement performance metric, our core focus should actually be on spend and what it can accomplish.

In my first post, I suggested that the total number of annual procurement hours is a fixed resource that must be maximised if we are going to approach our full potential. The same is true of spend.

A company’s total annual (or budgeted) spend is fixed. Simply shrinking it is a limited view of procurement’s impact, and one that has gotten us in trouble in the past for being overly cost-conscious.

Expanding View of Spend Management

In order to really influence spend under management, we need to back up or expand our view of the spend management process. Starting with eSourcing and moving forward is too late. By then, a significant opportunity to impact the category has already been passed.

The supplier discovery process – as reimagined by the team at tealbook, for instance – contains all of the value potential uncovered in downstream processes. While it might seem like more work to broaden the pool of prospective suppliers, it’s actually procurement’s best change to affect results by more than a shade or two at a time.

All measurements (savings, spend under management, etc.) need to drive meaningful improvements in results. They can’t just capture activity, and no measurement exists for its own sake. Because of the seemingly contradictory nature of the metrics in play, procurement is sometimes in the position of having to reconcile long term strategic value creation with short term business requirements.

In the face of this challenge, we have to make working the ‘right way’ so easy and intuitive that people don’t have an incentive to fall back on their old habits.

Importance of the Right Price

Procurement has successfully overcome a savings-driven mindset. It is time for us to help our internal stakeholders overcome a status-quo mindset. I have been in situations when an internal stakeholder tells me something along the lines of, “This is an area where we aren’t really concerned about what we pay.”

And while we need to be careful not to alienate someone by beating the ‘savings drums,’ this is a prime opportunity to educate, and to explain why it is important to get the right price regardless of what is being bought.

Each dollar spent has the potential to create varying levels of value. Not being worried about what you spend in a particular category or on a specific product is one thing. But what if you could accomplish more with that same dollar? Maybe there is a more innovative supplier or a next generation product available?

If a company’s doesn’t open their mind to what is possible, and investigate qualified alternatives, they condemn their potential to the bounds of the past.

tealbook allows companies to pursue inquiries like these without holding up the project timeline. In fact, an internal stakeholder can search the suppliers themselves if they like. They may even uncover new potential sources of supply that match their definition of desired value.

Shifting the Stakeholder Mindset

This mindset-shift is a challenge that the procurement community as a whole can stand up and address together.

Procurement pros are notoriously conservative in their sharing habits. While this makes a lot of sense in specific cases, any opportunity to contribute to, or benefit from, aggregate industry intelligence may be just the cure we need to closed-minded stakeholders and the frustration they create.

I have been around a lot of different procurement and purchasing groups, and they get all worn down. I’ve seen unbridled energy and excitement degrade to the point of becoming a lack of professional engagement.

When we don’t set up the true mission of procurement right – maximising the value of every dollar spent – it’s not a fun place to work. But hope is not lost. Procurement is not done innovating.

Catering to business clients is a big role for procurement. We need to draw those clients into the process and make it easy for them to understand the real meaning behind differentials in cost. Not just in terms of savings, but also in terms of what the spend can accomplish for the company. Ultimately, this will carry procurement forward to the next phase of our development.

And that is something I can hardly wait to see play out.

Gregg Brandyberry is a recognised pioneer in procurement and sourcing technology. He has over 40 years experience in industries such as automotive, textile, manufactured goods, electronics and healthcare.

He is the former Vice President of Procurement – Global Systems and Operations for GlaxoSmithKline, and a Senior Advisor for A.T. Kearney’s Procurement and Analytic Solutions organisation.

Procurement talks a good game when it comes to efficiency. However, few are walking the walking when it comes to taking real action.

This is the second in a three-part series of posts. If you missed my first, ‘Instant Access to Supplier Information a Step Change for Procurement Productivity’, click here to read it.

In that post, I presented a challenge to anyone who assumes that having technology guarantees progress. Make sure your technology is earning its keep and not just putting your inefficient, manual methods online.

In this post, I’m going to take the same approach to efficiency.

What is Real Efficiency?

We talk a lot about efficiency in procurement, but we take very few steps to actually improve it. Real efficiency is more than doing more with less. It is also about timing. Sometimes, doing the same task at a different time increases the impact potential of the effort behind that task.

Take risk management or risk mitigation as an example. Addressing risk should be an active part of the sourcing process, not something to be managed afterwards. While risk information is readily available, sometimes what procurement really needs to know what their peers think of a supplier.

That is why tealbook combined internal supplier knowledge, data from Dun & Bradstreet, and aggregate intelligence from your industry peers into each supplier profile. Adding a peer view to the supplier discovery process not only makes it more robust, it significantly increases the trust factor for everything procurement learns.

Addressing risk early is critical. Two of the first opportunities procurement gets to mitigate risk arise during the supplier discovery process:

1. Inviting more qualified suppliers to participate in the sourcing process improves the final award decision.

You’re always going to lose some suppliers to disqualification or elimination. Investing in the discovery process up front decreases the fall-off rate, and ideally presents the team with a larger number of more qualified suppliers to negotiate with and consider for contracts.

2. Looking at supplier-related risk factors before the sourcing process begins makes it possible for procurement to push back on requirements if they are too confining.

Procurement tries to be good about collecting risk information in RFx’s, but many times it is too late to change the direction of a project based on what the team learns from suppliers.

By doing an early assessment of the available pool of suppliers and their relative risk before going to market, procurement creates an opportunity to widen the pool of prospective suppliers.

Making Efficiency Proactive

In addition to thinking about the timing of tasks and what impact that has on efficiency, procurement needs to look for opportunities to combine activities.

If you are going to conduct a supplier discovery exercise anyway, why not search a platform that incorporates third party risk data in addition to supplier information and buyer knowledge? tealbook incorporates D&B information into supplier profiles so procurement see which suppliers offer the product or service they are looking for in one place.

Taking efficiency to a more proactive level, why not pre-vet hundreds (or thousands!) of suppliers across a wide range of categories? With the right technology and information, procurement could, in essence, create a custom virtual marketplace of suppliers that are ready to bid at any given time.

A broad approach drives efficiency because the suppliers are already vetted and risk is moved up in the process without adding a step or a delay. This is an ideal application of technology because it enables something procurement can’t do on their own on the same scale.

Value creation goals notwithstanding, good procurement teams want competition as well. Without the supplier discovery pre-work being done, procurement is stuck with the same old suppliers time and time again.

And there is nothing efficient or strategic about that. Marketplaces are certainly not a new idea, but they are a path to efficiency that we should look for ways to improve.

Now that I’ve shared my point of view on scalable technology and marketplace efficiency, I’m going to wrap this series of posts with an optimistic view of procurement’s forward looking potential.

Gregg Brandyberry is a recognised pioneer in procurement and sourcing technology. He has over 40 years experience in industries such as automotive, textile, manufactured goods, electronics and healthcare.

He is the former Vice President of Procurement – Global Systems and Operations for GlaxoSmithKline, and a Senior Advisor for A.T. Kearney’s Procurement and Analytic Solutions organisation.

Procurement needs to maximise its productivity if its going to meet business needs. Having access to real-time supplier information is a step in the right direction.

GaudiLab/Shutterstock.com

When I started my career in procurement over 40 years ago, we used notebooks to store all of our supplier information.

Go ahead – be shocked or have a little chuckle about how ‘primitive’ we were! But guess what? Things haven’t changed nearly as much as people like to think.

Today, most procurement teams have modernised their supplier information management by using some type of a shared database. These solutions, while centralised and searchable, still rely on internal team members manually entering and then searching for supplier knowledge.

And while most companies are doing the best they can with scarce resources, it is important to remember that it is possible to make progress without actually resolving any key business issues, or becoming the slightest bit more strategic.

Value in Scalability

We had notebooks and you have a database. But if the information isn’t (a) current and (b) fully leveraged, it doesn’t really matter where it sits.

The true transformative value of any technology is its scalability. How much of an effect does it have on the amount of work each person can accomplish?

tealbook, a platform that centralises supplier provided information, internal supplier knowledge, data from Dun & Bradstreet, and aggregate intelligence from industry peers, has set this challenge of scalability as their target.

Making it possible for procurement to accelerate the discovery process through instant supplier recommendations, and improving the match between business needs and prospective suppliers, gets at that need for scale.

With better suppliers available sooner, procurement can achieve a step change in their productivity. This also helps to move the needle on the all-important metric of spend under management.

Productivity – Focusing Your Efforts

Let’s say you’ve got 20 people working 40 hours a week, 50 weeks a year. That gives you a maximum of 40,000 procurement hours per year. You’ve got to ask yourself how many of those hours the team spends looking or searching for something to satisfy an information need. Every hour not spent on value-added activities is an opportunity to improve productivity.

When we look at procurement’s productivity in the context of supplier discovery, we have to focus our attention on how much time procurement spends searching for the right suppliers before a sourcing project can get off the ground.

In order to decrease the time required for discovery – and increase the quality of the suppliers invited to participate – we need to make sure we’re searching a resource dense with suppliers and supplier information, preferably using a common language search rather than archaic codes.

Whether you’re looking at a supplier discovery platform or a more traditional supplier marketplace, the point is to focus your efforts where they are most likely to generate positive results.

There’s a huge advantage in somebody being willing to take the time to centralise the right information and maintain it. The resulting resource will make a dramatic improvement to what procurement is able to deliver, how often we can deliver those results, and just how BIG those results are.

There aren’t many companies adding employees, so if you can find a solution that dramatically changes the amount of work each employee can do, you’ve really got something strategic.

Meeting Real-Time Supplier Information Needs

Today, an increasing number of corporations want to believe that their procurement teams operate strategically. As that reputation spreads, more and more projects will come from the business.

In order to handle the increased demand for our time and skills, procurement has to be really good at making decisions about how to spend time and allocate scarce resources.

If we are going to facilitate purchases, strategically source every category, AND meet the real-time needs of the business, technology has to be capable of actual heavy lifting, not just function as an electronic supplier notebook.

In my next post, we’ll go beyond the supplier information modernisation process to look at the strategic value of a marketplace approach.

Gregg Brandyberry is a recognised pioneer in procurement and sourcing technology. He has over 40 years experience in industries such as automotive, textile, manufactured goods, electronics and healthcare.

He is the former Vice President of Procurement – Global Systems and Operations for GlaxoSmithKline, and a Senior Advisor for A.T. Kearney’s Procurement and Analytic Solutions organisation.